Government promises of NBN pricing 'unattainable': Internode

Internode has slammed the government’s cost pricing of the National Broadband Network (NBN), saying that NBN Co's business model and concentrating virtual circuit (CVC) pricing are financially unviable.

Internode yesterday released its pricing plan, with the cheapest plan offered set to cost $59.95 per month for a phone and internet bundle on a 12/1Mbps connection with a 30GB data allowance.

Internode head Simon Hackett wrote in blog post that the ISP is concerned the Gillard government won't be able to meet its commitment to end users paying similar prices to current ADSL2+ and phone service bundles and uniform national pricing.

“A number of pressure points in the wholesale pricing model exist which will make these promises from the government untenable in practice,” Hackett wrote.

“NBN Co, in my view, have not yet properly addressed the full lifetime impact of the costs of the participation by RSPs [retail service providers] across the built period.”

The CVC was also a concern for Hackett, who wrote that its cost construct will generate large overhead costs for RSPs while it is priced at the wholesale plan rate of $20 per megabit per month fee.

“A simple change to the pricing model (first 200 megabits of CVC included at no extra cost) would solve this almost entirely,” he claimed.

“…Internode discovered the necessity of this in practice during its pioneering work in the Tasmanian NBN initial deployment. We operated with a 100 megabit CVC size at first, and rapidly ran into unacceptable performance issues with our 100 megabit connected school customers.”

Expressing concerns that overhead costs would restrict RSPs from participating in the NBN, Hackett claimed that without reassessing the pricing structure, the ISP market would disenfranchise smaller ISPs.

“This then delivers a genuine level playing field in terms of effective per-user wholesale access cost for RSPs by removing the punitive long-term cost overhead that will otherwise exist.”

Malcolm Turnbull used Hackett’s comments about uniform national pricing and the release of Internode's proposed retail pricing for NBN plans to launch an attack against the Government.

"If the government can’t deliver on a crucial promise made to the country independents after the election about national uniform pricing, then I would advise those independents to revisit their decision to support this Government," Turnbull said

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